How long can these unprecedented times continue?
In late August 2021, cap hpi hosted its latest webinar on vehicle valuations, sharing our industry-leading insights with businesses across all automotive sectors. Watch our insightful webinar here, and read on for a few of our top takeaways.
Preliminary background on new registrations
Following a weak start, new registrations for cumulative passenger cars tracked above 2020 levels. While this rise signifies a steady return to the pre-pandemic normal in vehicle valuation rates, our industry is still some way off 2019 performance achievements. As of July 2021, new registrations hit 1.33 million units, compared with 830,000 in 2020 and 1.42 million in 2019.
To date, hybrid electric vehicles (HEVs), plug-in hybrid vehicles (PHEVs), and battery electric vehicles (BEVs) collectively account for almost one in four cars registered. In July 2021, that figure was even more robust and just short of 30% of the market share. July’s new HEV registrations were less than 1,000 units behind diesel vehicles.
In terms of vehicle fleet availability, there has been a significant year-on-year increase in available PHEV models ready for quotes, so this technology is now being actively promoted to the business user.
The LCV lowdown
New registrations for low-carbon vehicles (LCVs) have been more frequent than registrations for passenger cars. Currently, new registrations are tracking 2019 metrics almost exactly and are only 7,000 units behind that year. The shortage of new vehicles across both passenger car and LCV sectors has become a powerful story. manufacturers are increasingly issuing warnings that deliveries for the rest of this year will be tricky.
As we approached last year’s holiday season, it was evident that the demand for LCVs in the used commercial vehicle sector dropped off slightly. Although, the vehicles that sold still performed well against industry predictions.
It did give return to a phrase we had been missing for a while — the “provisional bid.” This approach is driven partly by the aspirations of vendors when vehicles do not reach their reserves, as they try and achieve similar performances from months prior that are unaligned with guide values.
A high proportion of the remarketing companies we survey reported that their stock levels had reduced in August compared to July, which could be linked to the holiday season being in full swing.
Here are a few additional eye-opening insights:
- A small number reported that the demand for LCVs reduced.
- Conversion rates also dropped, but no one had reported any reduction in prices.
- 40% of our customers expect September stock levels to be lower than the previous month, whilst 40% expect it to remain the same.
The used car market
Overall values culminated in a 3.7% average increase at three years. There was a slight lull in July; however, values began rising in early August.
In August 2021, we predicted a continuation of the summer of strength for used car values, although the increase has not been as large as anticipated. During September 2021, there will be fewer part-exchanges and fleet returns coming, meaning supply will stay constrained compared to plate-change months in the past.
Demand is also likely to remain how it is currently. Demand may increase in the future as more consumers decide to seek out a used car rather than wait months, potentially into next year, for a new one to be delivered.
As the furlough scheme finally reaches its conclusion and economic reality bites for some, even if demand dipped away, there would not be the supply levels available to cause any crash from current high values.
Gain more insights in our recent webinar, where we explored valuations and their relation to economic trends and market activity. Watch the entire webinar here!